CG73704 - Non-Resident Capital Gains Tax (NRCGT) - Disposals on or after 6 April 2015: Introduction: Some key features of new legislation

FA2015/S37 and FA2015/Sch 7 enact the provisions that extend CGT to chargeable gains accruing to non-UK resident persons on the disposal of an interest in UK residential property.  The legislation refers to this as “non-resident CGT” or “NRCGT”.

 

FA2015/S37 confirms that the scope of the provisions also covers individuals in the overseas part of a split year. Guidance on the Statutory Residence Test and what amounts to a split-year can be found in the RDR3: Statutory residence Test.

 

FA2015/Sch 7 introduces substantial new provisions, and also makes extensive changes to existing rules in TCGA92, TMA70 and other statute.  The legislation broadly aims to make the liability to CGT of a non-resident the same as that of a UK resident disposing of a similar asset on similar terms. 

 

  • charge to tax

TCGA92/S1(2A) (as amended by FA2015/Sch7/para 1) imposes on non-resident companies the new charge to non-resident CGT.  They are charged to CGT, and not CT, to the extent that the gains are non-resident CGT gains.  The legislation sets out various exemptions that can be claimed.

 

  • annual exempt amount

TCGA92/S3 contains provisions in new subsections (5BA) and (5D) which make the annual exempt amount available against a person’s net chargeable NRCGT gains for a tax year. If it is a split year for an individual only one annual exempt amount is available for the year.

 

  • rates of CGT

TCGA92/S4 provides that the rate of CGT for chargeable NRCGT gains accruing to a company is 20%.  Otherwise non-resident CGT is applied at the same rates as ordinary CGT for UK residents - 18% or 28% for most individual taxpayers, and 28% for trustees.

 

When determining the rate of non-resident CGT for individuals, consideration is taken in the same way as for UK residents of the amount of income taxable in the UK, which determines whether any part of an individual’s gains are taxed at 28%.

 

  • commencement

FA2015/Sch 7/para 61 provides that the amendments made by Sch 7 have effect from 6 April 2015 in respect of disposals made on or after that date.